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2022 (8) TMI 270 - NAPA - GSTProfiteering - supply of construction service - it is alleged that the Respondent had not passed on the benefit of Input Tax Credit (ITC) to him by way of commensurate reduction in the price - Contravention of of Section 171 of the CGST Act, 2017 - interest - penalty - HELD THAT:- It is clear from the plain reading of Section 171 (1), that it deals with two situations: one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP's Report that there has been no reduction in the rate of tax in the post GST period; hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed from the DGAP's Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April, 2016 to June, 2017) was 1.43% and during the post-GST period (July, 2017 to September, 2019), it was 5.69% in Project “Silver Oak”. This clearly confirms that post-GST, the Respondent has benefited from additional input tax credit to the tune of 4.26% [5.69% (-) 1.43%] of the turnover and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to all the flat buyers as Rs. 3,45,28,279/- for the project 'Silver Oak' which was availed by the Respondent. Interest - HELD THAT:- The Respondent is liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 3,45,28,279/- for the project 'Silver Oak'. Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- The Respondent has denied benefit of IT to the buyers of the flats being constructed by him in his project 'Silver Oak' in contravention of the provisions of Section 171 {1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act, However, perusal or the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.09.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. This Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017.
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